4.2.1. Formal banks, registered and regulated under the Banking Act (see below), have also begun to provide microcredit. In some cases, this has occurred where longstanding commercial banks have down-scaled their products or set up subsidiary companies to specifically engage in microfinance business (Central Bank of Kenya 2010). Notable examples include, Kenya Post Office Savings Bank, the Co-operative Bank of Kenya4, Equity Bank and Family Finance Building Society. In the case of the cooperative Bank it was decided in 1998 that its existing Small and Micro Credit Unit would continuing to wholesale funds to financial intermediaries such as cooperatives but also start its own direct lending on a pilot basis (Bell et al. 2002). DfID supported this by providing funding for technical assistance that it needed to develop new products and methodologies, and to make the necessary institutional changes (Bell et al. 2002). The microfinance programme was launched on a pilot basis in two branches during the first quarter of 1999 (Bell et al. 2002). In other cases, NGO initiatives have registered under the Banking Act following compliance with all stipulations including the minimum paid up capital of KShs: 0.5 billion (Dondo No Date, p. 7). The first to do this was K-Rep in In March, 1999 (Dondo No Date, p. 7).
32.7% of the adult population has access to formal financial services (15.0% in 2006 and 22.1% in 2009) and the proportion of the population using informal financial services declined to 7.8% in 2013 from 33.3% in 2006.
Part of the reason for this was the population accessing Formal, non-prudential (e.g. mobile phone providers) prudentially regulated (Banks, DT-S and DT-MFIs) financial services increased significantly: from 15% and 4.3% respectively in 2006, to 22.1% and 15% in 2009 and 32.7% and 33.2% by 2013.
Table 19: Growth in Mobile and Mobile Money in Kenya (CCK 2008a, 2009, 2010, 2011, 2012, 2013, 2014a)
Wanyama, F. O. 2009. Surviving Liberalization: The Cooperative Movement in Kenya.